Breakthrough in toxic dispute over Sydney Fish Market

3 months ago 17

The Sydney Fish Market’s six seafood retailers have agreed to move to their $836 million taxpayer-funded premises on Blackwattle Bay, ending a stalemate that has contributed to the poisonous relationship between the NSW government, Multiplex and the market management.

Sydney Fish Market told its existing tenants in an email on Thursday that “the significant majority” of them, including all seafood retailers, had signed leases for the new site, and certification had been ticked off for them to access the premises and commence their fitout works.

The Sydney Fish Market retailers refused to sign leases at the new site amid concerns about costs.

Infrastructure NSW anticipated the building handover to occur on 11 November, “facilitating an opening prior to Christmas”, the email said. Management has privately told its tenants that trading could begin in mid-December.

The agreement breaks a long-running deadlock between the Sydney Fish Market and its tenants, who have been invoiced with costs ranging from several hundred thousand to a few million dollars for their fitouts, though they claim the building is not fit for purpose.

Among their complaints are that the government’s contribution to services such as plumbing, electrical and mechanical work is capped at a figure beneath their requirements and has not been indexed, leaving them exposed when building costs rose during and after COVID.

They are also concerned that the power supply will be inadequate and that the allowance given to restaurants for mechanical exhaust falls short of their needs, forcing them to reduce their equipment or pay for more capacity.

Their refusal to sign their new leases had left open the possibility of legal action on the basis they had not been offered “like for like” premises under the terms of their lease agreements.

The Herald can reveal that former tenant Vic’s Meats reached a confidential settlement with the Sydney Fish Market on Monday, four months after the butcher abruptly closed its doors a day before Good Friday, the busiest trading day of the year.

Business owner Anthony Puharich posted on social media an image of the new market covered by a red cross and cited an “irreparable breakdown” in his relationship with the Sydney Fish Market behind his decision to depart the site.

“It is no longer commercially or financially viable for us to continue at our current location or proceed with future plans,” he wrote, and filed legal action a month later. He declined to comment this week.

Hanging over the tenants’ anxiety about the development is the prospect of a rental hike. The existing tenants are moving to the new building on the same below-market rate they are paying at the dilapidated premises on Bank Street, but they will be subjected to a rent review after five years.

Pelicans on the look-out for scraps at the Sydney Fish Market.

However, their reluctance to commit to the new site was beginning to exact a financial penalty. Some tenants had not submitted their rental fitout designs by the time construction began, which resulted in additional costs to accommodate the required changes.

Sydney Fish Market management declined to comment on whether it had offered its tenants any financial sweeteners to sign their agreements.

Infrastructure NSW said it had not offered the subtenants any extra financial contributions to sign their new leases, and had not changed its contribution towards their fitouts, though the amount was commercial in confidence.

“Allowance was made for fit out costs in the agreement for lease,” a spokesman said. “Costs incurred by the tenants in addition to these are at the cost of the tenants.”

The government inherited the project after its budget had already twice blown out, and has resisted pressure from Multiplex to increase the budget in response to soaring construction costs that have sent subcontractors to the wall. At least one subcontractor is suing the developer for allegedly refusing to pay it.

Infrastructure NSW chief executive Tom Gellibrand poured fuel on the costs dispute last month when he told the Australian Financial Review Magazine that the tenants were “stupid” to think the government would agree to index their fitout costs retrospectively.

“Why would I index it now?” he asked. “We’re two years into the deal.”

The design of the building continues to cause controversy, as buyers have been told the daily auction may need to begin as early as 3am at least initially, to clear the carpark for the general public.

The auction presently begins at 5am, as the open air carpark is not subject to the same flow restrictions. It has a similar number of spaces to the new carpark (around 400), but half as many visitors than are anticipated at the new site.

Sydney Fish Market management said the new market would have a drop-off zone for cars, buses and tourist coaches to alleviate pressure on the carpark.

“The [new market] will have improved segregation of trade and public vehicles, with specific areas dedicated to trade and public vehicles on morning auction hours,” the statement said.